The Shareholder Forum


Telephone and Data Systems, Inc.

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Forum Summary

Telephone and Data Systems, Inc.

Revised August 24, 2009

See also original

April 28, 2009 Forum Summary

A Forum program for shareholders of Telephone and Data Systems, Inc. (NYSE: TDS), and its publicly traded subsidiary, United States Cellular Corporation (NYSE: USM), was requested in April 2009 to consider alternatives for reducing a market valuation discount of more than 30%,[1] including

(a) strategic or transaction opportunities,

(b) selling or restructuring the 81% TDS ownership of its US Cellular subsidiary, and

(c) simplifying the four classes of TDS stock that provide control to a family voting trust holding only 11% of the economic equity interests.[2]

The initial focus of the program was on a shareholder proposal for recapitalization presented by Southeastern Asset Management, the company’s largest shareholder by economic interest, and on four questions developed at an open Forum meeting hosted by the New York Society of Security Analysts for presentation to management.[3]  The company’s chairman declined to respond to the questions at the company’s annual meeting,[4] and management subsequently refused to respond to the questions or other shareholder information requests.[5]

Responding to an 85% vote of non-management shareholders in support of the proposed restructuring,[6] and with trading in the various classes of TDS and US Cellular stock supporting the focus of Forum participants on event-driven opportunities for value enhancement, the following workshop projects were initiated to continue attention to shareholder interests:[7]

  Management Responsibility – to assure board members’ understanding of their duties to act in the interests of the company and all of its shareholders

  Value Enhancement Alternatives – to identify specific strategic opportunities that can be presented to the company’s board

This Forum program continues to be open, free of charge, to all marketplace decision-makers and the professionals who advise them, according to the Forum's standard Conditions of Participation.

August 24, 2009

Forum chairman:

Gary Lutin

Lutin & Company, 575 Madison Avenue, New York, New York 10022

Telephone: 212-605-0335



[1] Compared with the averages for all companies in the Reuters Wireless Telecommunications Services Industry Index and its Telecommunications Services Sector Index, the TDS Common Stock price of $27.49 as of the April 27, 2009 market close, the day before the Forum program was announced, was 54.8% and 29.9% below the averages of those wireless industry and telecom sector ratios to revenue, and 40.1% and 38.8% below the average wireless and telecom ratios to book value. As of the August 21, 2009 market close, after concluding the initial TDS Forum project, the closing price of TDS Common was $26.44 (3.8% lower than April 27) and its discounts to wireless industry and telecom sector averages, respectively, were 58.7% and 37.4% relative to sales, and 46.1% and 37.2% relative to book value.  During the same period, the publicly traded stock of the US Cellular subsidiary, reacting to both positive strategic evaluations and negative competitive analyses (see, for example, July 24, 2009, Macquarie Research Equities; 10 pages, 211 KB, in PDF format) increased 10.4% in price from $32.37 to $35.73 per share, reducing its discounts to the averages of Reuters wireless industry indices from 51.1% to 47.1% relative to sales and from 35.8% to 34.8% relative to book value.

[2] As reported in the TDS proxy statement, a voting trust for members of the founding Carlson family holds approximately 11% of total common stock that includes 95% of the Series A Common Shares with 10 votes per share and the right to elect 8 of the board’s 12 members, providing the trust with control of the board and 52.5% of total voting power.


The TDS program activities other than observation were suspended in August 2009 based on the advice of its initiator, Southeastern Asset Management, that it was satisfied with the results.

For charts of the market trading in shares of TDS and its publicly traded US Cellular subsidiary before and after the April 28, 2009 report to Forum participants of the program's initiation, and following Southeastern's June 2, 2009 SEC report that it had been selling its TDS shares, see

Conclusion of TDS Program



August 28, 2009 Forum Report

Analysis of Market Views

See also

August 17, 2009 Forum Report

Projects for Continuing Attention

to TDS Shareholder Interests


August 7, 2009 Forum Report

85% Vote in Support of Change


,Southeastern Asset Management, Inc.

August 11, 2009 press release

"Shareholders Demand Change at Telephone and Data Systems, Inc."


See also

July 27, 2009 Forum Report

Alternatives for TDS and US Cellular Investors


July 30, 2009 Forum Report

Management Choice of Adversary Response

to Shareholder Interests


For history of investor information requests, see

May 22, 2009 Forum Report

No Questions Allowed at TDS Annual Meeting


June 16, 2009 Forum Report

TDS Management Response to Shareholders


July 14, 2009 Forum Report

Management Refusal to Comply

with Information Requirements





News Reports

May 28, 2009

"No Questions Allowed at TDS Annual Meeting:

This Year's Governance Posterchild?"



March 11, 2009

"TDS under pressure to find big U.S. telecom buyer"




This Forum program is open to all shareholders of Telephone and Data Systems, Inc. (NYSE: TDS), and its controlled subsidiary, United States Cellular Corporation (NYSE: USM), and to any fiduciaries or professionals concerned with their investment decisions. Participation is free of charge, according to the Forum's standard Conditions of Participation.

The purpose of the Forum is to provide shareholders with access to information and a free exchange of views relating to their consideration of issues described in the Forum Summary. As stated in the Conditions, all Forum participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants. Forum polices are intended to support anonymous communication, and provide that participants will not be identified or quoted without their explicit permission.

The initiation of this program was supported by Southeastern Asset Management, Inc., which as manager of the Longleaf Partners Funds and other client funds is the largest TDS shareholder with common and special common stock aggregating more than 15% of the total of all classes outstanding. TDS has been invited to assume corporate responsibility for the costs of addressing issues of apparent significance to a broad range of its investors, according to the Forum's Conditions, and other participants may be invited to contribute support to the continuing program pending the company's acceptance of responsibility.

Inquiries and requests to be included in the Forum's distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.